SAFTA Misuse = Exporting Economic Terrorism to India

SAFTA Misuse = Exporting Economic Terrorism

How can misuse of South Asian Free Trade Agreement Treaty (SAFTA) be stopped?

By:

Vijay Sardana

The term economic terrorism or financial terrorism is strictly defined to indicate an attempt at economic destabilization by a group. Economic terrorism is defined in the following terms:

Contrary to "economic warfare" which is undertaken by states against other states, "economic terrorism" would be undertaken by transnational or non-state actors. This could entail varied, coordinated and sophisticated or massive destabilizing actions in order to disrupt the economic and financial stability of a state, a group of states or a society (such as market oriented societies or economies) or a trading exchange for ideological, monetary or religious motives.

These actions, if undertaken, may be violent or not. They could have either immediate effects or carry psychological effects which in turn have economic consequences. Misuse of SAFTA treaty is also part of the same agenda and motive.

Why SAFTA members allow their territories to be used as dumping ground to hurt India's economy? Whose agenda are they serving?

The main objective of the agreement is to promote competition in the area and to provide equitable benefits to the countries involved. It aims to benefit the people of the countries by bringing transparency and integrity among the nations. SAFTA was also formed in order to increase the level of trade and economic cooperation among the SAARC nations by reducing the tariff and barriers and also to provide special preference to the Least Developed Countries (LDCs) among the SAARC nations.

The purpose of SAFTA is to encourage and elevate common contract among the countries such as medium and long-term contracts. Contracts involving trade operated by states, supply, and import assurance in respect of specific products etc. It involves agreement on tariff concessions like national duties concession and non-tariff concession.

Misuse of SAFTA = Exporting Economic Terrorism

India extended trade benefit and preferential treatment under SAFTA to support our neighboring countries, in a true spirit of partnership in the interest of their development. If SAFTA members allowing their territory and systems to be used as dumping platform to hurt the economic interest of India it is like exporting economic terrorism. This unfair trade practices must be stopped. SAFTA members must appreciate that this privilege is for their own economic interest and not to be delegated to other nations. If they allow misuse, they should lose the benefit of SAFTA treaty.

How to develop an action plan to stop illegal imports and misuse of SAFTA?

Let me take the example of Edible Oil dumping from SAFTA:

1. Calculate total oilseed production in each SAFTA member countries [= P(oilseeds)]

2. Calculate esimated oil production in SAFTA [= P(oil)]

3.Calculate estimated consumption local consumption of oilseeds [= C(oilseeds)]

4.Calculate estimated consumption local consumtpion of oil [= C(oils)]

5.Calculate estimated export of local production of oilseeds [= E(oilseeds)]

6. Calculate estimated export of local production of oils [= E(oils)]

How much each SAFTA member can sell to India under SAFTA treaty:

Import Quantity Permit Formula

= P(oils) - C(oils) - E(oils)

All these data will be used for "Country of Origin" only. No imported product should be traded as local supply. Value addition must be based on local cost of production, not in the destination market. 

Caution: Under no situation quantity imported from SAFTA countries under concessional duty should NOT be more than the total marketable surplus from their domestic production. The surplus must be calculated based on 4 and 6 digit HS code basis.

The amount of imports taking place in various SAARC countries is far beyond their doemstic requiremet and consumption,All these imports are find way into India by misusing SAFTA  treaty.

India must permit on the leftover quantity in that country under SAFTA and anything beyond must be taxed as a normal trade. This quote must be fixed for every SAFTA members. This is in the true spirit of SAFTA and WTO. There is no object to anyone when trade is fair.

Hope our SAFTA friends will agree to a fair and transparent system, if they don't, they have ulterior motives. 

Imagine what will happen if China, Indonesia, Malaysia, etc start supplying all types of materials by their land routes to Nepal and other SAFTA / SAARC Members and misusing the provisions of SAFTA.

Let us implement this with immediate effect. We must learn some elements of trade negotiations with President Trump how to protect the national interest. 

If the government is keen to protect the national interest and interest of farmers, the author can make a detailed presentation on chapter-specific strategy.

Click here to study the impact : Trump tariff fallout: India becomes steel dumping ground; imports from China jump 67%, Japan 47% and Korea 35%